COMPANY NEWS

COMPANY NEWS; AST to Build PC Factory Near Beijing

By ANDREA ADELSON,

Published: September 10, 1993

LOS ANGELES, Sept. 9—
AST Research Inc., the fourth-largest American personal computer maker, today announced a joint venture with China to build a $16 million computer factory near Beijing that would make 100,000 PC's a year.

The deal, which will include efforts to develop China's nascent market for computers in schools and homes, could help AST solidify its position as China's best-selling computer maker. AST is so popular in China, where its PC's have been sold since 1985, that rivals promote their machines as "AST compatible" and clone makers turn out counterfeits of AST products.

"Establishing a leadership position in an early stage market has proved very key here," said Richard Zwetchkenbaum, a computer analyst for the International Data Corporation. "If they can do well in that country, they can do well in other countries in the region."

In addition, he said China's low labor costs could help AST remain competitive in the PC business. "This has implications for AST as a worldwide vendor."

Part of AST's strategy in Asia will be to capitalize on a recently acquired technology that permits data to be entered by pen on a screen. The Tandy Corporation's pen-based Grid system was part of a $160 million acquisition made by AST in July.

Currently, up to four keystrokes are needed to create a single Chinese character on AST machines.

"Clearly, Chinese can write far faster than they can use a keyboard," said Howard Elias, AST's marketing vice president. "We will be taking advantage of that technology."

AST stock rose 37.5 cents today, closing at $15.50 in Nasdaq trading.

AST, which was founded by three Asian immigrants, had 25 percent of China's $440 million market in 1992.

This year, International Data forecasts that 250,000 PC's will be bought in China, compared with 13.5 million in the United States, where growth is below 12 percent a year. China, the world's fastest-growing economy, will be snapping up PC's at a 22 percent annual rate through 2000.

"China represents the world's most promising market for PC's and other high-technology products," Safi U. Qureshey, AST's president, said in a statement.

AST declined to specify China's contribution to the venture. The plant will have 400 employees and open in September 1994 in a special economic zone in Tianjin, 60 miles southeast of Beijing. AST will retain 90 percent ownership.

Based in Irvine, Calif., AST had more than $1 billion in sales for the first time in 1992. In the next 12 months, China could generate 10 percent of the company's revenue, Mr. Elias said.

Graph: "Computer Strenth" shows breakdown of market share of the personal computer industry in China in 1992. The pie represents $440 million in total sales and 250,000 units. (Source: International Data Corporation)